A.M. Best Affirms Ratings Of Hamilton Re Ltd

March 6, 2016

A.M. Best has affirmed the financial strength rating of A- [Excellent] and the issuer credit ratings of “a-” of Hamilton Re, Ltd. [Hamilton Re] [Bermuda], Hamilton Specialty Insurance Company [HSIC] [Wilmington, Delaware] and Hamilton Insurance Company [HIC] [Wilmington, Delaware]. The outlook for all ratings is stable.

The ratings agency said, “The ratings of Hamilton Re are based on its excellent risk-adjusted capitalization, knowledgeable management team and favorable operating results including underwriting profitability.

“Partially offsetting these positive rating factors are the start-up nature of the company, the greater investment risk associated with an alternative investment strategy, the execution risk associated with HSIC and HIC, as well as the increased competition in the reinsurance marketplace that may challenge some of the company’s business plans.

“A.M. Best is concerned there is a possibility that Hamilton could be exposed to a convergence of events due to the adjoining of underwriting risk and the present risk in an alternative investment strategy. Also of concern is the relatively high gross investment leverage used by its investment manager, Two Sigma Investments [TSI].

“These risks could have an adverse effect on the company’s risk-adjusted capital. However, these risks are mitigated by Hamilton’s low underwriting leverage and experienced underwriting team. The investment leverage concerns are mitigated by the partially hedged nature of the portfolio, the large number of diversified liquid investments, and TSI’s lengthy investment track record, which includes significant positive investment results through the recent market volatility.

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